Short-Term Rentals Continue to Climb

The Washington City Council next week is poised to approve another special use permit to allow short-term lodging in a residential district.

The city’s planning board Monday recommended the council approve a request from Cowboy Holdings, LLC, for a permit to operate a short-term dwelling at 823 W. Second St.

If approved, there will be a total of 14 homes in Washington that are marketed for guests staying a few days, or up to 30 days.

The rise of short-term dwellings, commonly called VRBOs (Vacation Rental by Owner) or Airbnb, is expected to continue, said Sal Maniaci, community and economic development director.

“I think people will continue to see this as an option for lodging in town,” he said, “People are recognizing the demand for additional lodging because hotels are often booked.

“Airbnbs are a good way to fulfill that demand until there is an oversaturation in the lodging market.”

Maniaci explained that a 2018 study indicated that the Washington area could support another 100-bed hotel. Short-term rentals are helping to fill the needs for additional rooms here, he said.

A short-term lodging is a low-frequency use, which creates minimal traffic, and does not create any commercial activity that would disturb the surrounding properties, city staff has maintained.

These kind of rentals are often the only lodging available when a conference, weddings, or festival is happening in town, Manaici commented.

Short-term lodging, anything less than 30 days, is permitted in the downtown zoning district and the C-3 Overlay District, which is along Fifth Street.

Owners of residences outside the C-3 Overlay District are required to obtain a special use permit which must be approved by the Washington City Council after it is reviewed by the city planning and zoning commission.

In August, there were two special use permits issued for short-term lodging at homes located at 710 Clay St. and 1518 Riverview Drive.

History

The number of homes available for short-term rentals in Washington has continued to climb since the August 2017 solar eclipse.

At the time, city staff noticed that there were a number of homes available for short-term lodging use that were not registered with the city.

Following that event, homeowners who placed ads were contacted by city staff. They received a letter from the city informing them of the need for a conditional use permit to rent out rooms or homes for short-term use in residentially zoned districts.

Requests Denied

Not all Washington residents are on board with the short-term rental trend and there have been requests denied by the city’s planning commission.

In those cases neighboring homeowners objected to the request due to the increased traffic and other elements brought on by that kind of rental.

In some cases, neighbors fear that there will be large, noisy parties at the rentals.

However, the rentals are subject to ordinances and decimal levels can be monitored at the residences.

“I have not received a single complaint for an existing Airbnb,” Maniaci said. “There have not been any calls to our office with any issues.”

Bed Tax

Short-term lodging is subject to the city’s bed tax, a 5 percent tourism tax, and owners must purchase a merchants license. Airbnb, VRBO, traditional bed and breakfasts as well as hotels/motels all have to sign up for the same bed tax.

To stay on a level playing field, owners of short-term rentals contact the city when they see others without a business license on websites, said Maniaci, noting that others who rent rooms are realizing there are rules in place and contact the city themselves.

Quarterly reports show an increase in revenue generated from the tourism tax, Maniaci told The Missourian.

“There is a correlation to more short-term dwellings and the increase in the bed tax, he said. “There has been a pretty steady increase in the tax over the past few quarters.”

The cost of a special use permit is $150 and a merchants license is $25.

The tax has been set at the 5 percent maximum since 2007. The council must renew the rate every year. It is applied to motels, hotels and bed and breakfast establishments and the revenue is used to promote tourism in Washington.

The tourism tax, approved by voters in 1999, authorizes a maximum tax of 5 percent on motel bills. The tax goes into a tourism fund that is overseen by an appointed tourism commission, which contracts with the Washington Area Chamber of Commerce to undertake tourism activities. The Chamber also contributes to the tourism fund.

Of the revenue collected each year, 95 percent goes for promoting tourism and 5 percent goes to defray expenses of the tourism commission.

The tax money is used to leverage additional funds in the form of state tourism grants and co-op advertising with businesses and other entities.

In the past, funds have been used to fund larger items such as billboards and other advertisements.